Archive for May, 2008

I do not know what happened since last year, when the news came out of Indian farmers refusing to sell their land in order to develop export processing zones and thus forcing the government to do a U turn. In any case, this is an interesting piece of news here

Here are some more links about the current global food crisis. We need to keep watching the World Bank on the matter. On the 29th of April World Bank Group President Robert B. Zoellick announced that “a New Deal must embrace a short, medium and long-term response: support for safety nets such as school feeding, food for work, and conditional cash transfer programs; increased agricultural production; a better understanding of the impact of biofuels and action on the trade front to reduce distorting subsidies, and trade barriers.” In short, conditional feeding. He also called for Sovereign Wealth Funds to use a small percentage of their assets to provide the cash for this new deal. As in the late 1970s the petrodollar were used to fund third world debt to “help their development”, so now, the accumulated surplus which followed the last round of global accumulation can serve the next round of global restructuring.

Here are also three links that highlight speculation as the main reason for the recent climb in food prices.

A short extract from the newstatesman article will do here do make the point:

“Conventional explanations for the food crisis range from climate change to dietary change in China, from global overpopulation to the switch of agricultural production to biofuels. These long-term factors are important but they are not the real reasons why food prices have doubled or why India is rationing rice or why British farmers are killing pigs for which they can’t afford feedstocks. It’s the credit crisis.
This latest food emergency has developed in an incredibly short space of time - essentially over the past 18 months. The reason for food “shortages“ is speculation in commodity futures following the collapse of the financial derivatives markets. Desperate for quick returns, dealers are taking trillions of dollars out of equities and mortgage bonds and ploughing them into food and raw materials. It’s called the “commodities super-cycle“ on Wall Street, and it is likely to cause starvation on an epic scale.”

What does need to be explored is the link between the alternating of speculation waves (the latest of which is on food prices) and different phases of global restructuring. Also, I am curious, how many pension funds hold commodities futures in their assets?